Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Current ratio (CA) or working capital ratio
CA = Current assets/Current liabilities (times)
Current ratio measures the short term solvency or liquidity; it signifies the extent to which the claims of short-term creditors are covered by assets. Current ratio is basically looking at the working capital of the company. Effective management of working capital ensures that organisation is running efficiently. This will ultimately result in increased profitability and positive cash flows. Effective management of working capital involves low investment in non-productive assets such as trade receivables, inventory and current account bank balances. Also maximum use of free credit facilities such as trade payables ensures efficient management of working capital.
Normal current ratio is around 2:1 however this varies within different industries. Low current ratio may indicate insolvency. High ratio may indicate not maximising return on working capital. Valuation of inventories would have an impact on the current ratio, as will year end balances and seasonal fluctuations.
The use of ratios
We will now look at some of the working ratios in detail and illustrate how they can be interpreted.
What is the relationship between the arithmetic average and the geometric average return for each stock and the S&P 500? Explain. Compare the standard deviations for each of the
Four European vanilla Call options ()iC· on an underlier with no interim cash flows, have identical maturity T. Their strike prices iK are such that 1234KKKK A trader buys ()1CK an
If an MBA cost $35,000 and money can be invested to earn 7 percent, how much does the annual salary for a person holding a masters degree have to exceed that of other college gradu
The Gujistan dollar until January 1st 2009 was pegged to the USA dollar. As at 31st December 2008, the official spot rate between the two currencies was G$0.6147 = US$1, while the
1. Apply investment appraisal techniques to project cash flows in different business scenarios and in situations of uncertainty, to arrive at investment decisions and to evaluate t
Question: (a) Distinguish between endogenous and exogenous variables in a simultaneous equation model? b) Write down two equations which can be solved simultaneously, deter
To buy a retirement home, you will need $525,000 in 18 years. If funds can be invested at an effective return of 6 percent a year, how much must you invest today to have the desire
Question: (a) What do you understand by these processes? Autoregressive Distributed lag Moving Average (b) Write down an AR(2) process and a MA(1) process. (c) Calc
Question 1: a) Faced with fierce international competition Mauritius should protect its domestic industries, to survive in such an environment. Discuss. b) "The best way
#Identify at least five key pieces of data you would use in microeconomic decision making on the Web site.
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd